Confirmation of some really bad news for IFA businesses. The FCA will allow the amount clients can claim from the FOS to rise to £350,000 from April. There has been a huge backlash among many IFAs. The main concern is the impact on PI bills.
New Model Adviser leads on insurers warnings that PI bills could rise by 500% though the regulator expects this to be significantly lower at a still eye-watering 140%. It is worth noting that many IFAs say that the regulator’s estimate of PI bills for smaller firms of around £3,500 is simply wrong.
That is a pretty poor starting point for any calculation though one wonders if the regulator pays any heed to what advisers are saying on Twitter. (It probably should).
It all feels as if the regulator has gone for simplicity over fairness. There was a need to extend the FOS to cover small businesses in the wake of clear mistreatment of SMES by the banks. That doesn't justify a huge hike for firms dealing with individuals. One could even suggest the move is lazy!
Simply Biz also makes what seems to be a very valid point about whether really high value cases should be left to the expertise of the courts rather than FOS especially given its much publicised internal challenges.
A final point from me – this really seems to run against what the Treasury and FCA were trying to achieve with the Financial Advice Market Review. Surely actions which could widen the advice gap should be avoided.
The new FCA adviser directory is to include details of membership of professional bodies and qualifications. This is a welcome move as it should better inform the public. The crucial issue, however, may be getting the details correct. There has been substantial criticism of the existing information. We are however a long way from the time when it looked very much like the register was going to be allowed to wither on the vine.
Citywire notes that Hargreaves Lansdown is driving around one third of the inflows to Neil Woodford’s funds. In a way, this must raise the pressure on both businesses. The excellent story notes that other platforms with big execution-only client bases, such as A.J. Bell and Charles Stanley, have taken Woodford off their buy lists.
It may not quite be a case of succeed or fail together, but it could have repercussions for HL certainly if Woodford fails to deliver. Being right in the past may not mean being right in the future.